K.BHAVANI SHANKAR,COIMBATORE vs. DCIT, COIMBATORE

Shri K. Raghu, the Ld. representative for the assessee submitted that the first issue arises for consideration is addition of ₹8,73,22,381/- treating the agricultural land as capital asset. According to the Ld. representative, the assessee transferred 33.35 acres of agricultural land situated at Perur village, Coimbatore. The assessee has produced all the details including the copy of the sale deed before the Assessing Officer. For the year under consideration, the Assessing Officer after verifying the materials available on record found that the assessee has sold 22.63 acres of land situated at Perur village to Shri B. Somasundaram on 07.12.2011 for a total consideration of ₹9,05,20,000/- Though the sale deed was registered for ₹2,28,46,500/- the land was sold for ₹9,05,20,000/-. In fact, the agreement was entered into between the parties on 27.07.2011. The agreement discloses the sale value of the property as ₹40 lakhs only per acre. The assessee after taking into consideration of the sale consideration disclosed in the sale agreement claimed that the land in question is an agricultural land.

According to the Ld. representative, the Assessing Officer rejected the claim of the assessee holding the land in question is not an agricultural land, accordingly levied tax on the capital gain. Referring to the assessment order, the Ld. representative submitted that the guideline value was only ₹2,28,46,500/-. However the same was sold for ₹9,05,20,000/-. The Assessing Officer after considering the sale consideration of the assessee found that no sensible agriculturist purchases the land in question to carry out any agricultural operation. Accordingly concluded that the land in quested is not an agricultural land and it is a capital asset. Referring to the fair market value adopted by the Assessing Officer as on 01.04.1981, the Ld. representative submitted that even though a specific ground was raised before CIT (Appeals), the same was not adjudicated by him. The Ld. representative further submitted that the land in question is classified as agricultural land in revenue records. The chitta issued by the taluk office, copy of the order of settlement Commissioner was totally ignored by the authorities below. According to the Ld. representative, the assessee cultivated coconut trees with the help of pump sets. The assessee has also offered for taxation the agricultural income for the purpose of computing the correct tax. Hence, according to the Ld. representative, the addition made by the Assessing Officer may be deleted.

On the contrary Shri R. Jeyakumar, the Ld. Departmental Representative submitted that even though the assessee claimed the land in question is an agricultural land, there is no material available on record to suggest that the land in question is classified as agricultural land. In the absence of any material, regarding the classification of the land as agricultural land by the State Revenue Department, it cannot be concluded that the land in question is an agricultural land. Therefore, the CIT (Appeals) has rightly confirmed the addition made by the Assessing Officer. With regard to fair market value as on 01.04.1981, the Ld. D.R., very fairly conceded the specific ground raised by the assessee was not disposed off by the CIT (Appeals). Therefore at the best the matter may be remitted back to the file of the CIT (Appeals) to dispose off the ground raised by the assessee with regard to fair market value as on 01.04.1981.

We have considered the rival submissions on either side and perused the material available on record. The assessee claims that the land in question is an agricultural land. From the assessment order, it appears that the assessee was examined. The assessee clarified before the Assessing Officer during the course of examination that he purchased the land in question for making the same into plots and sell in as Farm sites. The Assessing Officer however proceeded on the assumption that the assessee claimed that the land in question is an agricultural land. The assessee has now produced the copies of the Chitta issued by the Taluk office and also copy of the order of settlement Commissioner in respect of this land. These materials were not considered by the Assessing Officer and the CIT (Appeals).

With the above observation, the appeal of the assessee is allowed for statistical purposes.